MIT’s Project Hamilton for CBDC open sources smart contract research

IndosNews - MIT’s Digital Currency Initiative (MIT DCI) released the source code for smart contract research focused on central bank digital currencies (CBDC), called PArSEC (Parallelized Architecture for Scalably Executing smart Contracts). Uniquely, the solution is designed specifically for central banks, is centralized, and avoids using blockchain, though it supports Ethereum smart contracts.

This work is part of Project Hamilton, a collaboration between MIT and the Federal Reserve Boston, with the source code released under the openCBDC initiative. While not yet ready for pilot or production, the project claims to be scalable enough for most central bank applications.

Supported Use Cases

The research aimed to explore more advanced use cases for CBDC beyond payments, such as:

Automated Market Makers (AMM) for cross-border FX transactions 24/7, similar to BIS Project Mariana.

Trading bonds, tokenized securities, and repurchase agreements (repos) using AMMs.

Cross-border interoperability via separate virtual machines for central banks and private companies, similar to the BIS Unified Ledger concept.

PArSEC Scalability

MIT claims PArSEC can support a peak throughput of 118,000 transactions per second (TPS) for Ethereum-style ERC-20 transactions, with an average transaction time of less than 1.6 seconds. In comparison, a permissioned Ethereum blockchain handles around 400 TPS.
Scalability is achieved by running operations in parallel and using a database instead of blockchain.

However, MIT acknowledges important assumptions, such as smart contract execution not needing to be linear, as long as the state reflects an ordered execution and contracts do not interfere with each other. In real-world scenarios like FX or securities trading, the order of transactions remains crucial.

UTXO vs Account-Based

Unlike other Project Hamilton research modules that adopted Bitcoin’s UTXO model for efficiency and privacy, PArSEC uses an account-based approach to support Ethereum smart contracts.
The UTXO model is similar to cash transactions where previous transactions don’t link directly to each other, while the account-based model allows for tracking all transactions if an account’s identity is known.
It’s important to note that smart contracts can still be implemented in the UTXO model, as seen with R3 Corda and DAML Canton.

Sumber: https://www.ledgerinsights.com/mit-cbdc-smart-contract-parsec/